BOISE, Idaho — A potential truce between lawmakers and the University of Idaho fell apart Wednesday, leaving the future of the university’s planned purchase of the University of Phoenix in doubt.

An effort to restructure the University of Idaho's purchase of the University of Phoenix failed on the state Senate floor Wednesday, potentially spelling doom for the North Idaho school’s planned $550 million purchase of the private online university. With only days remaining in this year’s legislative session, its path forward was in question.

Lawmakers voted down Senate Bill 1450 by a vote of 19-14, stymieing an effort by University of Idaho and the University of Phoenix to appease lawmakers, who have spent weeks exploring ways to address their concerns about taxpayer liability from hundreds of millions of dollars in needed bonding and decrying their lack of involvement in the negotiations.

The state university initially created a nonprofit, Four Three Education, to house the University of Phoenix. University officials and the State Board of Education — which is also the university’s Board of Regents — have maintained the nonprofit would wall off taxpayers from liability if the online university defaults.

Lawyers for the Legislature and Idaho Attorney General Raúl Labrador have argued that the creation of the nonprofit and planned purchase exceed the State Board of Education’s legal authority and violate the state constitution.

Idaho treasurer: State would still be liable under Senate bill

The bill would have converted the nonprofit into an independent body politic, similar to the Idaho Housing and Finance Association, and required two lawmakers appointed by legislative leaders and six community members without a financial interest in the corporation to serve on the 11-member board that would have overseen the nonprofit. Four Three Education would have been barred from asking for state funds and required to provide an annual report to lawmakers.

A Senate committee advanced that measure Tuesday, with lawmakers arguing that it offered a legal path to restructure the agreement and further insulate the state from future creditors.

But other state officials continued to cast doubt on the proposal, as lawyers, lobbyists and lawmakers scrambled to settle on agreements in the waning days of this year’s legislative session.

Treasurer Julie Ellsworth believed the new measure could still leave room for state liability “if things were to go south,” according to a letter she sent to lawmakers Wednesday.

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